Do Workers with Low Lifetime Earnings Really Have Low Earnings Every Year? Implications for Social Security Reform
Levy Economics Institute Working Paper No. 389
Posted: 13 Oct 2003
Date Written: September 2003
When it comes to retirement income policy, there is a general perception that workers have full 40-year working careers before retiring. Further, it is generally assumed that workers with low lifetime earnings have low earnings in each year during a normal working career. The basic research question is why do some workers have low lifetime earnings? Is it due to low earnings in every year, or is it due to some years of no earnings combined with years of relatively modest earnings? The key findings from this paper are: (1) most individuals with minimum (and subminimum) wage lifetime average earnings are women, and (2) most of these women have low lifetime average earnings because of fewer years with earnings, rather than low earnings in each year of a 40-year working career.
Keywords: Earnings Patterns, Social Security, Low-wage Workers
JEL Classification: J14, J30, H55
Suggested Citation: Suggested Citation